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Array Technologies, Inc. (ARRY)·Q1 2025 Earnings Summary

Executive Summary

  • Strong top-line beat with revenue of $302.4M vs S&P Global consensus of $264.4M (+14%), and adjusted diluted EPS of $0.13 vs $0.09 consensus; management also exceeded its Q1 guide ($260–$270M revenue; 11–13% adj. EBITDA margin) with $302.4M and 13.4% respectively . S&P Global estimates marked with * (see footnote).
  • Margin compression as expected: adjusted gross margin 26.5% (down 330 bps q/q) due to a legacy low‑margin VCA order, international mix, and roll-off of 45X amortization benefits .
  • Order book steady at $2.0B with 18% sequential growth in contracting; North America was ~65% of revenue (two large international projects skewed mix) .
  • FY25 guidance maintained (revenue $1.05–$1.15B; adj. EBITDA $180–$200M; adj. EPS $0.60–$0.70; adj. GM 29–30%) as management cited supply chain resiliency (now quoting 100% domestic content trackers) and affirmed delivery schedules .
  • Near‑term stock catalysts: sustained execution vs maintained FY guide, domestic content/IRA positioning, steel price‑driven ASP tailwinds, and updates on volume commitment agreements (VCAs) and bookings trajectory amid tariff/IRA clarity .

What Went Well and What Went Wrong

  • What Went Well

    • Revenue +97% y/y to $302.4M and +10% q/q on 143% y/y volume growth and ~$60M of 2024 pushouts delivered; adj. EBITDA $40.6M topped the high end of margin guide .
    • Commercial traction and product adoption: OmniTrack + Skylink drove 15% of Q1 revenue and 30% of new bookings; order book held at $2.0B with 18% sequential contracting growth .
    • Domestic content leadership: “We are now able to provide customers with quotes for our 100% domestic content trackers under Table I of the IRA” — CEO Kevin Hostetler .

  • What Went Wrong

    • Margin compression: adjusted gross margin fell to 26.5% (–330 bps q/q) from legacy fixed‑price VCA shipments, international mix, and roll‑off of prior‑year 45X amortization benefits .
    • Working capital investment led to negative free cash flow of $(15.4)M vs $45.1M a year ago .
    • Brazil macro (real devaluation, rates, new tariffs) and global tariff/IRA uncertainty continue to weigh on bookings cadence and mix; domestic revenue mix dipped to ~65% due to two large international projects .

Financial Results

MetricQ1 2024Q4 2024Q1 2025Q1 2025 S&P Consensus*
Revenue ($M)153.4 275.2 302.4 264.4*
Gross Margin % (GAAP)35.9% 28.5% 25.3% —
Adjusted Gross Margin %38.3% 29.8% 26.5% —
Adjusted EBITDA ($M)26.2 45.2 40.6 —
Adjusted EBITDA Margin %17.1% 16.4% 13.4% —
GAAP Diluted EPS ($)(0.07) (0.93) 0.02 —
Adjusted Diluted EPS ($)0.06 0.16 0.13 0.09*
  • Commentary: Q1 revenue beat consensus by ~14% and adjusted EPS beat by ~4 cents; management also beat its own Q1 revenue and margin framework provided in February .

Segment/Region Mix (where disclosed)

MetricQ4 2024Q1 2025
North America Revenue Mix (%)~73% ~65%

KPIs and Balance Sheet

KPI/MetricQ4 2024Q1 2025
Order Book ($B)2.0 2.0
Contracting Growth (seq)—+18%
Cash & Cash Equivalents ($M)363.0 348.3
Liquidity ($M)—~510 (incl. undrawn revolver)
Free Cash Flow ($M)44.6 (15.4)
Net Debt Leverage (x)—1.8x

*Values retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious Guidance (Feb 27, 2025)Current Guidance (May 6, 2025)Change
RevenueFY 2025$1.05B–$1.15B $1.05B–$1.15B Maintained
Adjusted EBITDAFY 2025$180M–$200M $180M–$200M Maintained
Adjusted Diluted EPSFY 2025$0.60–$0.70 $0.60–$0.70 Maintained
Adjusted Gross MarginFY 202529%–30% 29%–30% Maintained
Adjusted G&AFY 2025$144M–$152M $144M–$152M Maintained
Effective Tax RateFY 202524%–25% 24%–25% Maintained
Free Cash FlowFY 2025$115M–$130M $115M–$130M Maintained
CapexFY 2025$30M–$35M $30M–$35M Maintained

Note: Management’s Q1 guide ($260–$270M revenue; 11–13% adj. EBITDA margin) was exceeded with $302.4M and 13.4% .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3’24)Previous Mentions (Q4’24)Current Period (Q1’25)Trend
Tariffs/IRA & PolicyFocus on AD/CVD clarity; bipartisan support for energy credits; 45X final rules helpful; domestic content safe harbor updates pending Executive orders not expected to affect ITC/PTC/45X; on track for 100% domestic content in H1’25 Active DC engagement; confident despite tariff/IRA uncertainty; >75% of remaining ’25 domestic deliveries have domestic or in‑country panels Mixed near-term uncertainty; long-term supportive
Supply Chain & Domestic ContentU.S.-centric supply chain; 50 U.S./75 global suppliers; capacity 75GW On track for 100% domestic content; capacity and certifications at scale Quoting 100% domestic content; >50 U.S./>75 global suppliers; 93% U.S.-sourced domestic BOM content; tariff pass-throughs in >75% of contracts Strengthening optionality
Product & Innovation77° hail stow; SkyLink wireless; SmartTrack hail/snow; OmniTrack traction Innovation + robotics (Swap Robotics); installation efficiency OmniTrack/Skylink = 15% of rev, 30% of bookings; 2000V verification; expanding SmartTrack (H250 backtracking/diffuse) Broadening adoption
Regional TrendsU.S. stable by year-end; Brazil challenges; Europe modest Domestic order book momentum; Brazil debookings masking U.S. strength U.S. ~65% of rev (2 large international projects); Brazil slowdown persists; Europe/Middle East/Asia contracting momentum Mix volatility
Bookings/VCAsPipeline large; win rate > historical share Go‑get reduced; legacy VCA headwind persists 18% seq. contracting growth; rising VCA discussions; bookings cadence hinges on tariff/IRA clarity Improving setup, visibility pending
Steel/ASPsASPs down with steel; margin record from 45X Steel price rise could aid ASPs; disciplined pricing U.S. steel +25–28% y/y outlook; ASPs beginning to rise sequentially ASP tailwind emerging

Management Commentary

  • “ARRAY is off to a great start for 2025… We are now able to provide customers with quotes for our 100% domestic content trackers under Table I of the IRA.” — CEO Kevin Hostetler .
  • “Despite near-term policy-related headwinds, our order book is resilient and maintained at $2 billion. Robust sales and operational performance delivered… an 18% increase [in contracting] vs 4Q24.” — CEO .
  • “Adjusted gross margin declined by 330 bps [q/q], primarily due to the roll-off of prior year 45X amortization, [a] legacy fixed price volume commitment agreement, and a higher mix of international projects.” — CFO Keith Jennings .
  • “Over 75% of contracted projects allow us to pass 100% of the tariffs on to the customer… at least 75% of our remaining 2025 domestic deliveries are for projects that either have U.S.-made panels or panels already in the United States.” — President/COO Neil Manning .

Q&A Highlights

  • 2Q outlook and legacy VCA: No quarterly guide; management reiterated 1H ~55% revenue split; legacy low‑priced VCA impact largely behind 2025 .
  • Bookings cadence: Elevated quote activity; conversion timing depends on tariff/IRA clarity, especially around modules, inverters, transformers, and battery supply .
  • Steel pricing/ASPs: U.S. steel up ~25–28% y/y; ASPs beginning to increase; pricing flow‑through expected with normal lag into late ’25/’26 .
  • Tariffs pass‑through: >75% of contracted projects allow full tariff pass‑through; domestic BOM exposure to tariffs is low given 93% U.S. sourced content .
  • Liquidity and capital allocation: Revolver amended/extended to Oct 2028; total liquidity ~$510M; considering options on converts and term loan given market conditions .

Estimates Context

  • Beat/miss vs S&P Global consensus for Q1 2025: Revenue $302.4M vs $264.4M* (beat); adjusted diluted EPS $0.13 vs $0.09* (beat) .
  • Management also exceeded its own Q1 revenue and margin framework given in Feb. (actual $302.4M vs $260–$270M; adj. EBITDA margin 13.4% vs 11–13%) .
  • Note: Consensus “EBITDA” definitions may differ from company “Adjusted EBITDA”; comparisons are less meaningful without normalization.
    *Values retrieved from S&P Global.

Key Takeaways for Investors

  • Execution > expectations: Clear top- and bottom-line beats vs consensus and prior Q1 guide bolster confidence in FY25 guide despite macro/policy volatility .
  • Margin path is understood: Q1 compression was anticipated (legacy VCA, mix, 45X roll‑off); management still targets 29–30% FY adj. gross margin, implying improvement as mix normalizes .
  • Durable demand signals: Order book steady at $2.0B; sequential contracting +18%; rising interest in VCAs supports medium‑term visibility as tariff/IRA clarity emerges .
  • Domestic content edge: 100% domestic content capability, >75% tariff pass-through coverage, and 93% domestic BOM content insulate against tariff risk and support pricing power .
  • ASP tailwinds likely: Higher U.S. steel pricing is beginning to lift ASPs; expect lagged flow‑through to P&L with potential 2H25/2026 benefit .
  • Watch Brazil and mix: Persistent Brazil macro and international mix can pressure margins; management is prioritizing North America where discipline and domestic content credits are strongest .
  • Near-term trading setup: Maintaining FY25 guide post‑beat, domestic content milestone, and strong contracting trends are potential positive catalysts; bookings conversion updates around tariff/IRA clarity are key watch items .